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F e d e r a l R e se r v e B ank
OF DALLAS

Dallas, Texas, March 9,1949

To the Member Banks of the
Eleventh Federal Reserve D istrict:

There is enclosed a copy of an amendment to Regulation A, “ Discounts for and Advances to
Member Banks by Federal Reserve Banks,” effective February 17, 1949. This amendment changes
the provisions of subsection (h) of section 1 of the Regulation so as to permit Federal Reserve
Banks to accept from member banks, for discount or as security for advances under section 13 of
of the Federal Reserve Act, notes evidencing loans made pursuant to the commodity loan programs
of the Commodity Credit Corporation.
By adding a new sentence to subsection (a) of section 2 of the Regulation, the amendment
also permits Federal Reserve Banks to accept as security for advances under section 13 of the
Federal Reserve Act, certificates of interest issued by the Commodity Credit Corporation evidencing
the deposit of such notes in a pool of notes. Also, the amendment to Regulation A which became
effective September 11, 1944, in connection with loans made pursuant to Executive Order No. 9112,
or the Contract Settlement Act of 1944, has been eliminated because it is now obsolete.
The note forms prescribed by the Commodity Credit Corporation provide for endorsement
without recourse, whereas the requirement of the law and Regulation A that a note discounted for
a member bank be endorsed by the bank apparently contemplates endorsement with recourse. In
view of this, all such notes which may be offered for discount to a Federal Reserve Bank should be
accompanied by a separate agreement under which the member bank will assume all the liabilities
of an endorser with recourse and guarantee the payment of the notes. If the notes are offered as
collateral security to a member bank’s own note, rather than for discount, such an agreement will
not be necessary.
The following is applicable to certificates of interest offered as security for advances to
member banks:
1. An assignment by a member bank to the Federal Reserve Bank or reassignment by
the Federal Reserve Bank to the member bank shall be executed on Commodity Credit
Corporation Cotton Form I, titled “Assignment of Certificate of Interest.” Copies of
this form will be furnished by this bank upon request.
2. No assignment shall become effective during the first ten days of any calendar month.
3. The limitation prescribed by the Commodity Credit Corporation with respect to the
permitted number of transfers of certificates of interest, and referred to in the foot­
note on CCC Cotton Form I, will not apply to transfers of such certificates between the
Federal Reserve Bank and member banks.
Please insert the amendment in the ring binder containing the current operating bulletins
of this bank and the regulations of the Board of Governors of the Federal Reserve System. Also,
please acknowledge receipt of the enclosure on the post card attached.

Yours very truly,
R. R. GILBERT
President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

DISCOUNTS FOR AND ADVANCES TO MEMBER BANKS
BY FEDERAL RESERVE BANKS

AMENDMENT TO REGULATION A

Issu ed b y th e B oa rd o f G ov ern o rs o f th e F ed era l R e s er v e System

Effective February 17, 1949, Regulation A is amended in the follow­
ing respects:
1. The last sentence* o f subsection (h ) o f section 1 is amended to
read as follow s:
“ The requirement o f this section that a note be negotiable shall
not be applicable with respect to any note evidencing a loan which
is made pursuant to a commodity loan program o f the Commod­
ity Credit Corporation and which is subject to a commitment to
purchase by the Commodity Credit Corporation.”
2. Subsection (a ) of section 2 is amended by adding thereto a new
sentence reading as follow s:
“ In the event notes which evidence loans made pursuant to a com ­
modity loan program of the Commodity Credit Corporation and
which comply with the maturity requirements of subsection (a )
of section 1 o f this regulation have been deposited in a pool of
notes operated by the Commodity Credit Corporation, the certifi­
cate o f interest issued by the Commodity Credit Corporation
which evidences the deposit o f such notes may be accepted as
security for an advance made to a member bank under this sub­
section.”
♦This sentence was added to the Regulation in 1942 and constitutes the third sentence of
subsection (h) of section 1.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102